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Tuesday, March 17, 2009

New Domain Name Registries Feeling Heat From Trademark Owners

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More than ever before, Internet intermediaries are being asked to shoulder the responsibility of policing bad actors online. With copyright owners, it's "three strikes" proposals for ISPs and legal arguments that ISP compliance with the DMCA's notice-and-takedown provisions are not enough to escape secondary liability. Online publishers are busier than ever beating back attempts to find holes in CDA Section 230's immunity from claims arising from third-party content. And social networking sites, prodded by law enforcement officials, are undertaking new obligations to keep criminals from preying on their users.

The latest online intermediaries to feel the heat are domain name registries, the companies that manage registrations in the Internet's network of top-level domains. Ever since the beginning of the commercial Internet, trademark owners have complained that domain name registries should protect mark owners against the possibility that a squatter will register their mark, or some variation of it. Two 1999 documents, the Anticybersquatting Consumer Protection Act and the Uniform Domain-Name Dispute Resolution Policy, formed the basis of an uneasy truce between trademark owners and domain name registries and registrars. Domain name companies avoided trademark liability for infringing registrations and they were not saddled with a duty to perform expensive trademark checks on registrants. Trademark owners received a new federal cause of action for cybersquatting and an in rem process to go after the domain itself, plus a quick-justice, trademark-lite claim to "recuperate" the domain under the UDRP.

As I said, it has been an uneasy truce. The Internet Corporation for Assigned Names and Numbers and the registries and registrars it represents have done well under the current arrangement, selling millions of domains through an automated, "no questions asked" registration process. UDRP dispute resolution service providers, such as the World Intellectual Property Organization, have also enjoyed a tidy business throwing out the bad fish (and some that smelled just a little) in UDRP actions. And another entirely new industry -- domaining -- flourished, financed by PPV and PPC advertising. Not to mention domains used for phishing. And, of course, all legitimate actors benefit through low-cost domains.

But trademark owners have been miserable. Now that ICANN (a magical entity that can create online real estate out of thin air) is entertaining applications for what could be a substantial number of new top-level domains, trademark owners are back, and they are looking to cut a better deal than the one they cut in 1999. I think that nearly all trademark owners, and perhaps nearly all businesses, would like to see ICANN's effort to create new top-level domains dry up and blow away. Although the new domains would create new business opportunities and new avenues of expression for some, there is nothing in ICANN's proposal for the vast majority of Internet users. And nothing but a headache for trademark owners, who will initially be forced to spend money in purely defensive registrations and, down the road, be forced to file ACPA/UDRP claims to nudge registrants off infringing domains in the new top-level domains.

I see trademark owners' revenge in a WIPO proposal released last week (WARNING: this PDF is slow to load) calling for a "post-delegation process" that would permit trademark owners to take action against any new top-level domain registry itself if the registry "turns a blind eye to systemic cybersquatting in its domain, instead of adopting appropriate mechanisms to counter such abuse." Really? WIPO's own data indicates that systemic cybersquatting is already occurring in every commercially significant top-level domain. The WIPO proposal would permit trademark owners and WIPO to have their foot on the throat of any newly created top-level domain operator. According to the WIPO proposal, remedies for "turning a blind eye" to cybersquatting would include (1) transferring, canceling or locking domain name registrations, (2) injunctive relief (such as a prohibition against registration of domain names similar or identical to the complainant's mark, (3) implementation of "appropriate" rights protection schemes, (4) termination of contracts with selected registrars, (5) temporarily restricting the registry operator's right to sell new registrations, or (6) terminating the registry operator's agreement with ICANN. (My emphasis on that last one.)

Operating a new top-level domain does not sound like such a good business to be in anymore. Would anyone care to guess what a .com domain name registration would cost if Verisign had to play under WIPO's proposed rules? Looking at it from the domain name registry's view, I imagine it would be extraordinarily difficult for a registry to engage in business planning with WIPO ever-ready to root "systemic cybersquatting" out of its operation.

All of this is in addition to the sunrise protections and UDRP obligations against cybersquatters that now come standard with new ICANN top-level domains. The letter outlining the WIPO post-delegation proposal indicates that WIPO will be offering more details and pressing its case with ICANN in the coming weeks. ICANN continues to seek public comment here. The comment period expires April 13. It will be interesting to see how all of this sorts itself out this year.

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